THE Central Bank has hired senior counsel Ian Benjamin and Kerwyn Garcia to defend its position against the majority shareholders of CL Financial Ltd (CLF) who initiated legal action against the State to stop the sale of Colonial Life Insurance Company (Clico) and British American Insurance Trinidad Ltd (BAT) to Sagicor.
In a one page response sent to the shareholders on Thursday, attorney Elena Araujo said the pre-action protocol letter will be responded to "in due course" as it is now engaging the attention of the Central Bank.
On January 31, the 15 majority shareholders, comprising individuals and companies, wrote to Finance Minister Colm Imbert, Central Bank Governor Alvin Hilaire and Attorney General Faris Al-Rawi requesting that the sale of the insurance portfolio be stopped and for an independent valuation to be done.
Central Bank took emergency control of Clico/BAT when the parent conglomerate, CL Financial, approached the State in 2009 for a bailout. Taxpayers funded an over $20 billion payout to prevent the company from collapsing and refunded depositors.
The shareholders’ attorney Nalini Jagnarine stated that the Central Bank failed to relinquish control of the entities after it became evident that they were profitable, contrary to Section 44 of the Central Bank Act. The act gave the Central Bank the authority to seize control of the entities. This was done in 2009 and continues today.
Following Sunday Newsday’s article about the intended lawsuit, Imbert, who has yet to officially respond to the shareholders, tweeted: “Clico and CL Financial still owe the Government billions of dollars of taxpayers’ funds for the 2009 bailout and CL Financial is under the control of a court-appointed liquidator. Why do these former owners of these companies feel they could bully the Government into sacrificing the public interest.” In November 2019, Imbert told the Parliament that CL Financial was owing the State $8.109 billion.
Jagnarine said any attempt to sell the insurance company will be null and void given that the Central Bank should no longer be in control of the insurance companies as the conditions for it to be in control were no longer applicable. This, she said, opened the Central Bank up to liability to set aside the sale.
She added that even if the orders to sell the companies came from the Finance Minister and not a decision of the Central Bank, Imbert’s directive is also null for the same reason. She regarded the sale as illegal.
At a press conference in March 2019, Imbert said the two main bidders were Sagicor and Maritime, with the preferred bidder being Sagicor, even though the company’s bid was $300 million lower than Maritime’s.
Two months later, Hilaire cited a confidentiality agreement that prevented him from commenting on the bidding, on who was the preferred buyer or the value of the transaction.
In 2013, the Central Bank initiated a civil lawsuit against former top-ranking CLF executives and their privately-owned investment companies. The lawsuit claimed Clico's assets and income were fraudulently misappropriated to the detriment of policyholders and mutual fund investors. The Central Bank's lawsuit is based on an investigation conducted by forensic accountant Bob Lindquist following the January 2009 collapse of the CL Financial empire.